Sh. Santosh Pandey, New Delhi V. ACIT, New Delhi

ITA 409/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3223 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ANAND KUMAR VERMA
• Keywords: Unexplained expenditure; Additional evidence
• Section: 40A(3); 133A; 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 409/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) SANTOSH PANDEY, C - 2, / 2417, VASANT KUNJ, NEW DELHI PAN:AAGPP5802P VS. ACIT, CIRCLE - 38(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ANAND KUMAR VERMA, CA REVENUE BY: SH. NK BANSAL, SR. DR DATE OF HEARING 03/05 / 2017 DATE OF PRONOUNCEMENT 04 / 05 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXVIII, NEW DELHI DATED 04.11.2013, WHERE THE TWO ADDITIONS WITH RESPECT TO OUTSTANDING BALANCE OF CREDITOR AND A DISALLOWANCE U/S 40A(3) OF THE ACT WERE CONFIRMED. 2. THE ASSE SSEE HA S PREFERRED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] IS BAD , BOTH ON THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED CIT (A) HAS ERRED BOTH ON THE FACTS AND IN THE LAW BY MAKING AN ADDITION OF RS. 19,20,758/ - ON ACCOUNT OF OUTSTANDING BALANCES OF M/S SHARMA PETROLEUM AGENCY SHOWN IN THE BOOKS OF APPELLANT AS SUND RY CREDITORS. 3. THAT THE TOTAL EXPENSES INCURRED / PURCHASED MADE BY APPELLANT FROM M/S SHARMA PETROLEUM AGENCY RS. PAGE 2 OF 6 63,03,241/ - ON ACCOUNT OF DIESEL PURCHASED DURING THE FINANCIAL YEAR 2009 - 10 RELEVANT ASSESSMENT YEAR 2010 - 11 DISALLOWED U/S 40A(3) OF THE ACT. 4. THAT THE ADDITION MADE BY THE LEARNED CIT (A) BASED ON THE REMAND REPORT SUBMITTED BY LEANED ACIT, CIRCLE 38(1), NEW DELHI STATING THAT ALL PAYMENTS WERE MADE IN CASH EXCEEDING RS. 20.000/ - IN A SINGLE DAY. 5. THAT THE DIESEL PURCHASED BY APPELLANT FROM M/S SHARMA PETROLEUM AGENCY OF RS. 63,03,241/ - WAS PAID BY CASH AS SUPPLIER WAS NOT ACCEPTING CHEQUE PAYMENTS. 6. THAT ALL PURCHASE MADE FROM M/S SHARMA PETROLEUM AGENCY OF RS. 63,03.2417 - WAS DISALLOWED U7S 40A(3) OF THE ACT. THE OUTSTA NDING SUNDRY CREDITORS IN THE NAME OF M7S SHARMA PETROLEUM AGENCY OF RS. 19,20,758/ - WAS STANDS NULL, AS CREDITORS OUTSTANDING IS OUTCOME OF TOTAL EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT, 7. THAT BY MAKING AN ADDITION OF RS. 63.03,2417 - U/S 40A(3) OF THE ACT AND RS. 19,20,7587 - ON ACCOUNT OF OUTSTANDING CREDITORS BALANCE IS BAD ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DOUBLE ADDITIONS MADE FOR SINGLE EXPENSES INCURRED BY THE APPELLANT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL CARRYING ON THE CONTRACT BUSINESS UNDER THE NAME OF M/S. SANTOSH AND ASSOCIATES AS ITS PROPRIETOR. HE FILED HIS RETURN OF INCOME ON 21.09.2010 DECLARING INCOME OF RS. 33056536/ - . THIS RETURN WAS SUBSEQUENTLY REVISED ON 22.10.2010. A SURVEY U/ S 133A OF THE ACT WAS CARRIED ON AND DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE HAS CLAIMED CERTAIN EXPENSES, WHICH ARE NOT VERIFIABLE. FURTHERMORE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS ALSO NOTED THAT THE ASSESSEE HAS INCURR ED EXPENDITURE OF RS. 22099677/ - UNDER THE HEAD DIESEL EXPENSES. IT WAS FOUND THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITOR OF RS. 1920758/ - IN THE NAME OF M/S. SHARMA PETROLEUM AGENCY, SRI GANGANAGAR, RAJASTHAN FROM WHOM DIESEL OF RS. 6303241/ - WAS PURCHASE D. IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE RS. 4382483/ - WAS PAID TO THIS PARTY AND BALANCE AMOUNT OF RS. 1920758/ - IS OUTSTANDING. LD AO, U/S 133(6) PAGE 3 OF 6 ENQUIRY LETTER WERE SENT TO THIS PARTY AND IN RESPONSE, THAT SUNDRY CREDITOR REPLIED THAT ABOVE NAME A SSESSEE HAD NO CREDIT DEALING OF PETROLEUM AND DIESEL AND THEREFORE NO SPECIFIC ACCOUNT FOR THE ASSESSEE WAS MADE BY THE CREDITOR. SUBSEQUENTLY, THE LD AO MADE DISALLOWANCE OF THE ABOVE SUM. THE ASSESSEE CONTESTED THE ABOVE ADDITION BEFORE THE LD CIT(A) V IDE GROUND NO. TWO OF THAT APPEAL AND THE ASSESSEE ALSO SUBMITTED ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES. THE LD CIT(A) OBTAINED THE REMAND REPORT FROM THE AO AND REJOINDER FROM THE ASSESSEE AND HELD THAT THE ASSESSEE HAS MADE CASH PAYMENT OF THE SUM OF RS. 6303241/ - AND CONFIRMED THE DISALLOWANCE U/S 40A(3) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD CIT(A) THE ASSESSEE PREFERRED AN APPEAL BEFORE US. ON THE SAME ISSUE THE LD CIT(A) FURTHER CONFIRMED THE ADDITION OF RS. 1920758/ - WHICH IS SHOWN AS CLOSING BALANCE OF SUNDRY CREDITOR IN THE NAME OF M/S. SHARMA PETROLEUM AGENCY FROM WHOM PURCHASE OF DIESEL OF RS. 6303241/ - WAS MADE. THE LD CIT(A) HELD THAT PAYMENT FOR THE SAID PURCHASE HAVE BEEN MADE BY THE ASSESSEE OUT OF BOOKS OF ACCOUNT THAT THOUGH THE BOOKS OF ACCOUNT ARE DISCLOSING A CREDIT BALANCE OF RS. 1920758/ - IN THE NAME OF SAID PERSON. AS NO SUCH AMOUNT IS OUTSTANDING AS THE PAYMENT HAVE ALREADY BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT HE FURTH ER CONFIRMED THE ADDITION OF RS. 1920758/ - . THE ASSESSEE IS ALSO AGGRIEVED BY THIS ADDITION. 4. THE LD AR SUBMITTED THAT THERE IS DUPLICITY IN ABOVE DISALLOWANCES AS SAME SUM IS ADDED/ DISALLOWED TWICE , ONCE U/S 40A(3) AND SECOND BY THE CREDIT BALANCE OF THE SAME PARTY FOR WHICH THE WHOLE ADDITION HAS BEEN MADE, THEREFORE, ONLY ONE OF THE ADDITION CAN BE SUSTAINED. HE ALSO OPPOSED THE PAGE 4 OF 6 DISALLOWANCE U/S 40A (3) OF THE ACT STATING THAT PAYEE DEMANDED THE CASH. 5. THE LD DR VEHEMENTLY OBJECTED THE ARGUMENT O F THE LD AR AND SUBMITTED THAT BOTH THESE ADDITIONS ARE INTERCONNECTED BUT ARE INDEPENDENT . HE FURTHER SUBMITTED THAT THE CREDITOR HIMSELF HAS STATED THAT THERE IS NO DEBIT ACCOUNT OF SUCH PART Y AND NO SALE OF DIESEL AND PETROLEUM HAS BEEN MADE ON CREDIT BASIS TO THE ASSESSEE . THEREFORE, BOTH THE ADDITIONS DESERVE TO BE CONFIRMED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . THE BRIEF FACT OF THIS ISSUE IS THAT A SUM OF RS. 1920758/ - IS OUTSTANDING AS PAYABLE IN THE BOOKS OF THE ASSESSEE IN THE N AME OF M/S. SHARMA PETROLEUM AGENCY, DISTRICT SHRI GANGANAGAR, RAJASTHAN, FROM WHOM A PURCHASE OF DIESEL FOR AN AMOUNT OF RS. 6303241/ - HAS BEEN MADE. A SUM OF RS. 4382483/ - HAVE BEEN SHOWN AS CASH PAYMENT MADE TO THAT PARTY AND BALANCE OF RS. 1920758/ - WA S FURTHER SHOWN AS PAYABLE AT THE END OF THE YEAR. THE ABOVE PARTY IN RESPONSE TO QUERY LETTER U/S 133(6) OF THE ACT HAS STATED THAT IT HAS NOT SOLD ANY PETROLEUM, DIESEL TO THE ASSESSEE ON CREDIT BASIS AND THEREFORE IT WAS INFERRED THAT A CREDIT SHOWN BY THE ASSESSEE IN THE NAME OF ABOVE PARTY IS FICTITIOUS. ON THIS TRANSACTION THE ADDITION OF RS. 6303241/ - WAS CONFIRMED BY LD CIT(A) APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT . BEFORE US THE ASSESSEE COULD NOT DEMONSTRATE THAT THIS PAYMENT WAS FALLING IN TO ANY OF THE EXCEPTION PROVIDED UNDER RULE 6DD OF THE INCOME TAX RULES, 1962 AND THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) IN CONFIRMING THE ABOVE DISALL OWANCE U/S 40A (3) OF THE ACT, AS ABOVE PAYMENT S HAVE BEEN MADE IN CASH BY THE ASSESSEE TO M/.S SHARMA PETROLEUM AGENCY, RAJASTHAN. 7. ACCORDING TO THE BOOKS OF ACCOUNT THE OF THE ASSESSEE PURCHASE OF RS. 6303241/ - HAS BEEN DEBITED BUT HAS ONLY SHOWN A PAGE 5 OF 6 PAYMENT OF RS. 4382483/ - IN CASH, THE BALANCE AMOUNT OF RS. 1920758/ - WAS SHOWN AS OUTSTANDING, WHICH REMAINED UNCONFIRMED . THE CREDIT BALANCE OUTSTANDING IS ARISING OUT OF TOTAL PURCHASE OF RS. 6303241/ - WHICH HAS ALREADY BEEN ADDED U/S 40A(3) OF THE ACT . FURTHER THE ADDITION PERTAINING TO THE SAME DISALLOWANCE OF OUTSTANDING BALANCE IN THE NAME OF CREDIT OF RS. 1920758/ - IS DUPLICITY OF THE ADDITION. IT IS NOT THE CASE OF THE REVENUE THAT EXPENDITURE INCURRED BY THE ASSESSEE OF RS. 4382483/ - IS DISALLOWE D U/S 40A(3) AND BALANCE SUM IS ADDED AS UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE FOR WHICH IT DOES NOT HAVE SOURCE . IN VIEW OF THIS, IT IS APPARENT THAT IN AN Y CASE THE DISALLOWANCE CANNOT EX CEED THE SUM OF RS. 6303241/ - FROM TH AT ANGLE ALSO . IN VIEW OF THIS , WE CONFIRM THE DISALLOWANCE U/S 40A(3) OF THE ACT OF RS. 6303241/ - AND CONSEQUENTLY DISMISS GROUND NO. 3 TO 7 OF THE APPEAL OF THE ASSESSEE AND ALLOW GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE BY DIRECTING THE DELETION OF ADDITION OF RS. 1920758/ - ON ACCOUNT OF OUTSTANDING BALANCE OF M/S. SHARMA PETROLEUM AGENCY, RAJASTHAN ONLY FOR THE REASON OF DUPLICITY OF ADDITION. 8. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS GENERAL IN NATURE AND THEREFORE IT IS DISMISSED. 9. IN THE RESULT, THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 4 / 05 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 05 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT PAGE 6 OF 6 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI